The congress is supposed to meet every year, although a few have been missed over the years and is largely a numbers exercise. It contemplates reports by government officials, passes legislation by acclamation and confirms appointments of senior officials. Importantly, too, it gives outsiders a glimpse of the new directions in government policy on virtually everything.

Perhaps its most important affirmation will come when Xi Jinping is unanimously confirmed as head of the Communist Party, the country’s ultimate alpha male in the year of the dragon. The Communist Party itself gets its refit later this year and the government follows in spring 2013. Xi Jinping and a new, younger crop of increasingly “technocratic”, well-educated, internationally experienced leaders are stepping into senior positions to lead the party and the government for the next decade.

Photo: Military delegates from the Chinese People’s Liberation Army (PLA) walk towards the Great Hall of the People for a meeting during the annual session of China’s parliament, the National People’s Congress, in Beijing March 4, 2012. China will increase military spending by 11.2 percent this year, a spokesman for the nation’s parliament said on Sunday, building on a nearly unbroken succession of double-digit rises in the defence budget across two decades. REUTERS/Jason Lee.

The country’s incumbent vice premier, Li Keqiang, a protégé of President Hu Jintao, is slated to step up and replace retiring Premier Wen Jiabao. Xi recently wound up a major visit to the US to size up Barack Obama – and vice versa – and the Chinese have apparently surmised Obama will be back for a second term, come November.

Cheng Li, director of research at the John L Thornton China Centre of the Brookings Institution, noted that besides the shift from Hu to Xi, and Li to replace Wen, the chairman of the National People’s Congress, Wu Bangguo, is also expected to retire and the party’s politburo and standing committee will be repopulated with a large number of new faces as well.

Chatham House’s Kerry Brown said, “One side-effect of the Dengist economic reforms was the transition from a ruling Chinese Communist Party focused on class struggle and revolutionary aspiration under Mao, to one in which a new technocratic elite were in control.”

In the past 15 years, earlier gatherings of the NPC focused on moving the nation’s legal system toward a “rule of law” and away from the Mao-style “rule by men”. This has been important for China to fit in with the international norms that govern the world’s trading and capital markets, especially now the country is one of the great trading nations of the globe.

Going forward the NPC must take greater ownership of an array of serious challenges, including those highlighted in the recent World Bank report urging more vigorous shifts towards market economy reform measures and away from older forms of administrative control. Key among these is how to keep the economy ticking along at an impressive rate, although the government’s latest projection is that it will fall from over 8% to a still-impressive 7.5% as the global economy continues to falter.

In addition, the Chinese economy’s managers must grapple with the shift of its economic growth model that is moving away from manufacturing for export and towards domestic consumption and services. Further, they must contemplate how they will come to grips with an increasing gap between the rich and the poor.

And they must do this while modulating pressures for political reforms such as a greater choice of candidates for local offices and more local administrative autonomy even as it does not make the kinds of fundamental changes in its political system of the past.

After 30 years of broad economic reform, China is a more complex, diverse society than before. Regional rivalries, growing corruption, the serious environmental degradation, the increasing precariousness of job tenure and security, let alone job losses from greater automation and mechanisation, fiscal wobblies, massive cross-provincial migration and new social tensions have become easily observable features of China.

Moreover, the old way of governing a generally docile, poorly informed population no longer works. Many millions of Chinese are increasingly well informed through the media, especially digital media like the Weibo micro-blogging site the government now watches closely to gain insights into the country’s public opinion as well. Half a billion Chinese now use the Internet and half that use micro-blogs. Increasingly, Chinese citizens are willing to air their grievances and this has been contributing to literally thousands of spontaneous “mass incidents” in response to local examples of corruption, environmental damage, official abuse and illegal land grabs.

Photo: Ethnic minority delegates walk towards the Great Hall of the People to attend the opening ceremony of the National People’s Congress (NPC) in Beijing March 5, 2012. REUTERS/David Gray.

As crucial as these reforms are, a key challenge inside may evolve from the continuing ethnically based unrest in Xinjiang and Tibet. The nation’s leaders must find ways of dealing with the island government of Taiwan as well as the demands inside the special economic zones of Macau and Hong Kong.

China’s leadership is also grappling with managing its growing international economic and political heft, but without generating a serious backlash from other countries – most particularly its Asian neighbours and the US. Statements from this NPC should be a map to a more subtle exercising of China’s impact on its neighbours.

Nonetheless, Wen Jiabao said China intended to tailor its military to prevail in nearby conflicts. “We will enhance the armed forces’ capability to accomplish a wide range of military tasks. Most important is to win local wars under information-age conditions.” These comments came a day after China said it planned to increase its defence budget by 11.2% to some 670-billion yuan (about R808-billion) this year.

In his opening statement at the NPC on Monday Wen offered an upbeat assessment of the state of his nation. Wen said threats posed by local government bad debts and soaring real estate prices were under control, the economy was robust and  “the people’s wellbeing is improving”.

He said the nation’s economy was on a controlled glide that would allow it to hit the target set in 2011 for China’s five-year plan to hit an average of 7% growth through to 2015 and growth in imports and exports decline by 10%, compared with a drop of 24% in the year before.

Wen added China’s government would turn the focus to raising ordinary people’s incomes and recalibrating the national economy towards domestic consumer demand and away from industrial investment and exports. According to The New York Times Wen’s speech focused on “the slowdown in China’s growth is coupled with the beginning of a structural transformation toward a consumer-based economy, a change long advocated by economic experts.” In fact, Wen’s speeches have repeatedly promised to rebalance the economy, but entrenched domestic political resistance impeded many of the structural changes fundamental to such a goal.

Reading Wen’s remarks, some experts said they had heard this song before. Stephen Green, an economist with Standard Chartered Bank in Hong Kong, commented: “There is a growing recognition that rebalancing is not really happening. Consumption is not really going up, the state sector continues to expand, the private sector continues to suffer, and the income gap is growing. This is probably not the year for rebalancing.”

“Government debt in China now is at a controllable and secure level,” Wen said. “China’s economy as a whole continues to grow as we anticipated in our exercise of macro-controls and has become more resilient.”

Nonetheless, he admitted China’s leadership was “keenly aware that China still faces many difficulties and challenges in economic and social development,” such as the sluggish growth in the rich nations that are China’s primary export markets, the threat of the ongoing European debt crisis and growing tendency globally towards trade protectionism.

Wen added the economy faced real difficulties in boosting rural incomes, restraining energy use, curbing pollution and finding qualified workers for booming industries. Wen explained, “Some long-term and short-term problems are interwoven, structural and cyclical factors affect each other,” and the ongoing integration of China into the global economy is making the effective management of economic growth increasingly complex. Nonetheless, Wen said China had seen a slight drop in the unemployment rate for college graduates, to 22.2%, and a 4.4% increase for workers in rural areas where high unemployment has been stubbornly persistent.

Chinese planners were working on creating the basics of a national health insurance network and there is a pilot programme that includes coverage for lung cancer and 11 other major diseases. There have also been steady increases in pension benefits and the minimum wage. Addressing a particular bugbear for millions of Chinese workers, Wen pledged to make it easier for migrant workers to change their official residence to the cities where they actually work and live. Doing this would permit them to obtain government benefits and enrol their children in local schools rather than in towns and villages hundreds of kilometres away in the country’s hinterland.

Measures like this, if fully carried out, may help unlock ordinary citizens’ substantial savings.

However, a key demand by American politicians and policy analysts — allowing China’s currency to float more freely and rise to its market value — seems beyond Wen’s horizon. He did say the Chinese government would fiddle with mechanisms for setting the rate, but that it would stay “basically stable at an appropriate and balanced level”.

In a long laundry list Wen added the Chinese government would focus on further developing the country’s high technology and green industries, improving the quality of public education, doing battle with corruption and making food and other products safer.

Now that Vladimir Putin is in charge again in Russia and Xi Jinping has set out his agenda for the future, perhaps it simply remains for Americans to pick their leader for the next cycle for the world to figure out how the pieces will all fit together – except for a few small issues like North Korea, Iran, Israel/Palestine, the Somalian pirates, international pandemics, global climate change and the medal totals at the London Olympics. DM

Read more:

• China NPC 2012: The Reports (The National People’s Congress is in session and its “big three” reports – English and Chinese versions of the Report of the Government, the Ministry of Finance Budget Report, and Draft Plan for National Economic and Social Development – are available as PDFs) at the WSJ – China website.
• In China’s Annual Assessment, Wen Is Optimistic at The New York Times.
• Chinese premier touches on military, economy at the CNN website.
• Li promises stable growth at China Watch/Washington Post.
• China cuts growth target to 8-year low, to boost consumption at Reuters.
• China’s march to currency dominance just got longer at Reuters.
• China’s Midterm Jockeying: Gearing Up for 2012 at the Brookings Institution’s China study center.

Photo: A delegate yawns during the opening ceremony of the National People’s Congress (NPC) at the Great Hall of the People in Beijing March 5, 2012. REUTERS/Jason Lee.